FPT Retail is looking for a new growth engine by penetrating into the pharmaceutical retail market in the context of the gradually saturated mobile phone retail market.
Ms. Nguyen Bach Diep, chairman of the board of directors and general director of FPT Retail, officially announced her plan to enter the pharmaceutical retail industry in front of FPT Retail’s 2018 Annual General Meeting of Shareholders on the morning of March 28.
Long Chau, a pharmacy with ten years of operation in Ho Chi Minh City, was acquired by FPT Retail to implement the plan to expand into the retail industry. Since the initial five drugstores, FPT Retail has opened five more Long Chau pharmacies in Ho Chi Minh City after one year of acquisition.
2018 is no longer a testing year for pharmaceutical retail, Mrs. Diep said and affirmed that she would open a Long Chau pharmacy like the company opened FPT Shop.
In 2018, FPT Retail plans to open 20 more pharmacies and increase the coverage of this chain by about 100 stores per year to reach 400 stores after the next four years.
FPT Retail entered the pharmaceutical retail industry in the midst of a saturation period in the mobile phone market, the company’s main retail segment.
The phone market has grown at over 9% in the past year, according to data from GfK Vietnam market research company. However, the remaining growth driver is not much, when retail technology stores have strongly expanded their stores across the country in recent years. FPT Shop currently has nearly 500 stores, while The Gioi Di Dong owns more than 1,700 retail stores of phones and electronics.
With the strength in operating electronic retail systems, two leading companies in this industry are looking to expand into other retail areas.
The mobile world announced that it had completed the expansion of mobile phone and electronics stores and is focusing on the department store chain. This market leader is also planning to enter the pharmaceutical industry and has already invested in An Khang drugstore chain.
Pharmaceutical industry has great potential for growth in the long term because Vietnam has just entered the post-“golden population” period and at the same time it is entering the aging population. This is the main driving force that helps the pharmaceutical industry begin to enter the early stages of development after a long period of spontaneous development and lack of planning and methodical control, according to the securities company FPTS.
The scale of Vietnam’s pharmaceutical industry reached about US $ 4.7 billion in 2016, according to BMI research.
According to Mrs. Diep, the cost of pharmaceuticals of Vietnamese people is still quite low compared to other countries, about 30 USD / person / year for medicinal products and functional foods, while this consumption in Thailand is 45. USD, in Singapore it is 142 USD.
FPT Retail is expected to take up about 30% of the market share of the pharmaceutical channel through pharmacies after a few years, with revenue of about VND 10,000 billion.
The pharmaceutical retail industry is also divided into three channels: hospital channel, clinic channel and pharmacy channel. FPT Retail is expected to take up about 30% of the market share of the pharmaceutical channel through pharmacies after a few years, with revenue of about VND 10,000 billion.
Long Chau drugstore has a monthly revenue of about 136 thousand USD, much higher than other operating drugstores systems, according to data provided by FPT Retail. This pharmacy system has 60% of revenue comes from modern medicine, the remaining 40% comes from cosmetics, medical equipment, and functional foods.
Entering a new retail industry poses many challenges for FPT Retail.
“The product expertise is very new, we must definitely think the right way to go to the right school as quickly as possible”, said Mrs. Diep. The female leader who has been with FPT Retail since the early days said that optimizing logistics and finding personnel are the difficulties that the company is facing.
FPT Retail sets a plan to increase revenue by 22% in 2018 compared to last year, at 16,020 billion VND, with expected after-tax profit of 377 billion VND, up 30%.
To achieve revenue growth of over 20% this year and in the coming years, FPT Retail will open 100 more stores this year with the goal of increasing the number of stores to 580 and seeking ways to increase sales. revenue from each store by sales programs.
FPT Retail is currently the official authorized Apple agent in Vietnam. The company aims to reach 100 F.Studio stores specializing in selling genuine Apple products from 10 current stores and plans to work with Samsung and Xiaomi to open stores of these brands in Vietnam.
* Source: Forbes Vietnam